Ashley Giles has backed the ECB's decision to relegate Durham after saving the county from bankruptcy.

Durham have been relegated from Division One of the Specsavers County Championship and will begin next season with an additional 48-point penalty, as well as points being deducted in the NatWest T20 Blast and Royal London One-day Cup.

The county have also been taken off the list to host Test matches.

The sanctions have been agreed with the England and Wales Cricket Board as a condition of £3.8m of financial support from the national governing body.

Durham's demotion from the top flight of domestic first-class cricket means Hampshire will remain in Division One instead next summer.

It was first revealed last week that Durham may face relegation as they and the ECB seek a solution to the club's financial difficulties.

An ECB statement on Monday afternoon confirmed relegation and a series of further measures.

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And Giles, whose Lancashire side were grateful to Durham for beating Hampshire on the final day of the season to keep the Red Rose in Division One, believes the ECB had to act.

“It is a horrible situation for the club, Durham's supporters and players,” the Lancashire head coach and cricket director told BBC Radio 5 Live.

Durham's Ben Stokes

“The ECB have done as well as they can. The have a responsibility for all counties and they need to look after their stake holders.

“The ECB sit on around £70m-£80m worth of reserves and should help Durham out, but there is no way it could have gone through without some sort of repercussion because Durham need to realise they can't get away with this much debt.

“All counties at some point will have a few months where they worry about paying the bills.

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“I feel sorry for the players, some of them are tied into long contracts recently and it will be interesting to see if they are tied into them.”

The ECB statement read: "The England and Wales Cricket Board today announced that Durham County Cricket Club has accepted an offer of significant additional financial support from ECB in order to manage current and historic debt and revenue issues.

"ECB has been working with the board and chief executive of the county and its stakeholders throughout 2016 in order to ensure that Durham could address their financial issues. This support has included advancing an annual fee payment of £1.294 million. There has been no direct investment to date.

Durham's Chester-le-Street ground

"The £3.8 million financial aid package - which has been approved by the ECB board and accepted by the board of Durham CCC - will allow the club to meet ongoing salary, HMRC and operating costs, settle a substantial debt to a secured creditor and focus on the restructuring and future sustainability of the County Cricket Club.”

Durham's 2016 prize money will be retained by the ECB until all the club's debts have been settled, and future redevelopment at Chester-le-Street can take place only after prior agreement with the governing body.

The ECB has set aside £2million of Durham's debt following the agreement that the county can no longer stage Tests.